Gold investors have always seen their investments keep pace with inflation. Presently, many people are unaware and misinformed about the deteriorating effects of inflation. Ronald Reagan once said, “Inflation is as violent as a mugger, as frightening as an armed robber, and as deadly as a hit man.” For example, given a very low three percent inflation rate, $100,000 would be worth only $73,740 in purchasing power after ten years. Even worse, there have been times of double digit inflation in our economic history.

Gold Investors Understand Inflation

The great investment feature of gold is that it has always kept pace with inflation. You can therefore rely on your gold investments to at least keep your purchasing power consistent over time. Money markets that produce returns rates below the inflation rate, like they are right now, cause investors to lose money to inflation. Given the current financial environment, very few investments provide the same level of protection as gold.

The U.S. government thought badly enough about the crippling affects of inflation that they created a financial instrument. Treasury inflation protected bonds (TIPS), protect you from inflation. Given the low interest rate environment, however, the yields on TIPS are practically nothing, and the principal value will decline as interest rates rise.

Gold investors over the next decade will not only realize returns that equal inflation, but will capitalize on increases in gold prices. Most investment pundits, such as Warren Buffet, have been diversifying away from the greenback. At Global Bullion Traders, we can discuss adding gold to your portfolio for return potential and inflation protection.